Property slump in Thailand’s North

Real estate developers in Thailand’s North are a bracing for a slump in the residential property market, as the number of home buyers is dwindling and banks are imposing stricter rules on home buyers and reportedly denying mortgages. The president of the Chiang Mai Real Estate Association says the economic slowdown and lower confidence among buyers will lead to a further drop in the property market.

He says housing sales and transfers in northern Thailand slowed last year because of the US-China trade war. Many Chinese buyers were unable to get units transferred as moving funds from China to Thailand became more difficult.

“More than half of Chiang Mai’s GDP is from the tourism industry, which is stumbling. Many job seekers today are those who used to work in the hotel business.”

The president of the Phitsanulok Real Estate Association says his province will also see a market slowdown this year, due to lower purchasing power and weaker demand, in line with other markets across the country.

“As the virus spread in Thailand, some home buyers browsed housing projects online and decided to buy. Many of them were rejected for mortgages because banks have become more cautious than before the pandemic.”

A spokesman for the Real Estate Information Centre says the absorption rate of residential supply in Chiang Mai for all types of residences is facing a drop, from 2.5-4.2% per month in 2019 to 1.1-1.6% this year.

“Housing Developers should be more wary of launching new supply this year. Especially as market sentiment will be unfavourable due to the pandemic. Also a large volume of unsold housing developments remain.”

The REIC predicts that unsold homes in Chiang Mai will rise to at least 9,343 units by the end of the year; higher than the 5 year average of 8,694 and up from 9,149 units worth 35.42 billion baht as of the end of 2019.

Of the 2019 amount, 2,615 units worth 10.7 billion baht were completed and ready to transfer. The number of residential units being transferred in Chiang Mai this year is estimated at 12,156 units worth 23.14 billion baht, down 7.9% and 14.6% respectively from 2019.

SOURCES: Chiang Rai Times | Bangkok Post